Pension Reform in Slovakia: Fiscal Debt and Pension Levels

Igor Melicherèík and Cyril Ungvarský

Czech Journal of Economics and Finance (Finance a uver), 2004, vol. 54, issue 9-10, 391-404

Abstract: This paper considers two aspects of a recent pension reform in Slovakia: the financial balance of the former pay-as-you-go system, and the level of retirement pensions in a newly introduced two-pillar system. Generally, there are three important steps to sustainable pension reform: a change of pension indexation, a raised retirement age, and the launch of a fully funded (second) pillar. With regard to fiscal debt, the two-pillar system is superior to the pay-as-you-go system in the long term. Having considered the risk of returns on savings in the funded pillar, the authors show that while pensions under the two-pillar system should be higher than under a one-pillar system, it is not a certainty.

Keywords: pension reform; Slovakia; fiscal debt; pension level; asset returns; risk (search for similar items in EconPapers)
JEL-codes: C15 E27 G11 G23 (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:fau:fauart:v:54:y:2004:i:9-10:p:391-404

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